Liability for genetic modification
The Hazardous Substances and New Organisms (HSNO) Act contains special provisions for compensation for harm and penalties for offenders where the user of a genetically modified organism (GMO) has broken the law. Where there has been harm, but the law has not been broken, anyone affected can take a case under common law.
What happens if the use of a GMO breaches HSNO
If a genetically modified organism (GMO) causes harm (that is damage to you or your property) then there are provisions in HSNO to get compensation for it under what is called a civil liability regime. This means that anyone who breaches HSNO is liable to pay compensation to those people affected.
Individuals and organisations are considered to have broken the law if they have not obtained the necessary approval for a new organism (including a GMO), or if they do not comply with the conditions imposed on the use of that organism. In these cases, people who are harmed by an activity that breaches the law will only have to prove that a breach has occurred and that they have suffered damage. They will not have to prove that the harm was caused by someone else’s negligence.
There are some defences available to companies or individuals who breach the law. These are when:
- the breach of the law happened in order to save or protect life or health, prevent serious damage to property, or avoid potential or actual harm to the environment;
- the action which led to a breach of the law was outside the defendant’s control – for example, a natural disaster, mechanical failure or sabotage;
- the action or event could not reasonably have been foreseen or provided against by the defendant;
- the defendant did not know and could not reasonably have known of the breach.
It is also possible for the Ministry of Agriculture and Forestry (MAF) to take legal action to have a civil penalty imposed on anyone breaking the law, whether or not any harm resulted from the breach. These penalties have been set in line with other legislation (such as the Commerce Act 1986), and are designed to be large enough to provide a real incentive for people to comply with the requirements of HSNO. In the case of an individual, the maximum penalty that could be imposed by the Court would be $500,000. In the case of a business, a company or other organisation, the maximum would be either:
- $10 million; or
- three times the value of any commercial gain that results from the breach; or
- 10% of the turnover of the company involved (including any subsidiaries).
The penalties would not apply if the defendant did not know, or could not reasonably have known of the breach.
What if there hasn’t been a breach of HSNO?
Under New Zealand law you don’t have to break the law to be held responsible for any damage that your actions do to other people or their property.
Cases of nuisance or negligence can be taken where someone suffers damage as the result of the activities of a neighbour. This has been longstanding practice in cases where there has been damage to neighbouring properties through pesticide use and spray drift.
This is different to the civil liability regime under HSNO because there does not have to be a breach of HSNO in order to bring a case.
What about insurance for GMOs?
While it is possible for companies to obtain insurance for genetic modification (GM) applications, some international insurance companies may be reviewing their policies.
Where insurance companies are hesitant about insuring GM applications, it is not because of the actual risks posed, but because genetic modification has not been in commercial use long enough for the industry to have a clear idea of the level of risk they may be exposed to. For example, GM crops have been grown commercially overseas only since 1996, and that is a short time span for an insurance company to base their decisions on. What is more, New Zealand’s use of GM is quite likely to be completely different to that of overseas countries, meaning that any information gathered overseas may be of little direct use to insurers in New Zealand.
Without a risk history to draw on, insurance companies cannot reliably calculate how much to charge in premiums. If they get the premium wrong, they could open themselves up to financial risk as insurance companies need to make a profit if they are to be able to honour all the potential claims they may receive.
This reluctance to offer cover is not confined to GM. Companies do not offer insurance, for example, for new seed varieties and as a result, reputable seed companies often have assurance schemes in place for their products in case they do not live up to expectations.
Last updated: 17 September 2007
